March 11, 2011 – The Wisconsin Employment Relations Commission (WERC) ruled that Washington County negotiated with a public employees’ union in bad faith by failing to disclose a serious potential for privatizing services. Recently, the District II Wisconsin Court of Appeals disagreed.

In Washington County v. Wisconsin Employment Relations Commission, 2010AP582 (March 9, 2010), the appeals court – in an opinion written by Judge Paul Reilly – held the county did not have a duty to disclose its intention to subcontract with a private vendor during collective bargaining negotiations, and reversed the circuit court.

The Service Employees International Union Local 150 represented many employees working at the Samaritan Health Center nursing home, which Washington County owned and operated. Since 1974, the county and the union have negotiated collective bargaining agreements concerning the employees that work for the nursing home.

Prior to ratifying its 2007-08 collective bargaining agreement, the county authorized a formal request for proposal to subcontract the nursing home’s laundry and housekeeping services to a private contractor. The county did not notify the union of this intent during negotiations, but the union was aware the county was interested in exploring cost-saving measures.

Subsequently, the county proceeded with the private subcontract and laid off 18 union members, saving the county $234,165. The union filed a complaint with WERC alleging prohibited labor practices.

The union alleged the county violated Wis. Stat. section 111.70(3)(a)1, 4, and 5 of the Municipal Employee Relations Act, which generally prevents a municipal employer from interfering with the collective bargaining rights of municipal employees, and prohibits unfair labor practices.

Ultimately, WERC concluded the county failed to bargain in good faith under section 111.70(3)(a)(4) because it failed to disclose its serious interest in retaining a private subcontractor as a way to reduce operating costs. The circuit court affirmed.

Appeals court disagrees

The appeals court reviewed City of Marshfield, No. 28973-B (WERC March 23, 1988), a case in which WERC determined the city did not negotiate in bad faith by failing to disclose that wage increases would lead to layoffs, because the union should have known to ask.

“As City of Marshfield conflicts with WERC’s decision in this case, we hold that WERC’s position on this issue has been inconsistent and provides no real guidance to this court,” Judge Reilly wrote. Judge Reilly noted that “when a union requests information that is relevant and reasonably necessary to the bargaining process, the municipality must furnish that information, but the municipality has no duty to provide information that the union does not request.”

The court concluded that the county’s duty to disclose the serious possibility of hiring subcontractors did not arise unless the union raised the issue. Raising the issue could have led to negotiation, but the county was not compelled to raise it, the court explained.

“[T]he Union’s silence indicates that it assented to the subcontracting language,” Judge Reilly explained. “We hold that the County did not act in bad faith when it exercised its clear contractual right to subcontract as the mandatory subjects of layoffs and subcontracting were bargained for by the parties.”